The Aes Corporation

Abstract

The power generation and distribution company AES operated throughout the world. Its business was capital intensive and required a commitment to long-term investments under difficult-to-navigate regulatory hurdles. The case highlights various financial disclosures related to some of the company's important investment and obligation accounts along with interesting descriptions of various causes of asset impairments that occurred during 2011. AES engaged in a modest amount of lease transactions that are highlighted as well. Finally, environmental and litigation contingency disclosures play a role in understanding the firm's long-term risk exposure. Excerpt UVA-C-2347 Rev. Mar. 13, 2014 THE AES CORPORATION Improving lives by providing safe, reliable and sustainable energy solutions in every market we serve. —AES Corporation mission statement For the AES Corporation accomplishing its mission was not a simple task. AES was a global power company that owned and operated electricity-generation and -distribution businesses. The company operated in 27 countries and, accordingly, had to navigate a wide array of international regulations and cultures; however, energy had fast become a basic societal need, essential to economic growth and public well-being. Any company that delivered a reliable and affordable supply of electricity ultimately succeeded, and AES chose a path of international, operational, and product diversification. Its power plants used a broad range of technologies and fuel types, including coal, oil, diesel, hydropower, gas, and wind. Its markets spanned the globe from Brazil to Sri Lanka to Texas (Exhibit 1). It conducted business in both power generation (primarily making the product) and power distribution (primarily transporting the product). . . .